Reservoir Media, an independent music company, has announced plans to raise up to $100 million through an offering of various securities.
The move signals Reservoir’s ambition to fuel further growth through acquisitions while reducing its debt.
The company provided some details on the offering in an S-3 statement filed with the US Securities and Exchange Commission on Monday (April 29). The planned offering provides Reservoir with the option to issue a combination of common stock, preferred stock, debt securities, depositary shares, warrants, rights, purchase contracts, or units.
Reservoir has yet to determine the offering structure, pricing, and terms.
Proceeds from the planned offering will be used for a variety of general corporate purposes, including acquisitions. The company said it seeks to expand its music publishing and recorded music catalogs by acquiring businesses and assets that complement its existing operations.
In February, Reservoir revealed that it had spent $938 million on acquisitions since its inception in 2007 to December 31, 2023. Of the total, $770 million went into investing in acquisitions of catalogs and companies. The company also allocated $168 million since inception into “futures spend,” or signings of songwriters to write new songs.
Its notable catalog acquisitions and signings include the Eagles’ Joe Walsh, four of The Spinners’ members, rock artist and songwriter Greg Kihn, ‘Queen of Arab Pop’ Nancy Ajram, Latin Music hitmaker Rudy Perez, Egyptian rap duo El Sawareekh, and Miami Sound Machine co-founder and lead songwriter Enrique “Kiki” Garcia.
In addition to acquisitions, Reservoir also plans to use a portion of the proceeds to reduce its debt burden, potentially improving its financial flexibility and creditworthiness. In its report for fiscal Q3 2024, the quarter ending December 31, 2023, Reservoir had $342.5 million in total debt, $322.9 million in net debt, and total available liquidity of $121.7 million.
The offering will also allow Reservoir to buy back some of its outstanding shares, increasing the value for existing shareholders. Reservoir also intends to use the proceeds to beef up its working capital and its capital expendture.
The plan comes amid a resurgence in the music rights market. High-profile deals involving iconic artists like Bryan Ferry, Tony Bennett, KISS, and Neil Finn of Crowded House underscore the ongoing value of intellectual property in the music industry.
Reservoir Media is a New York City-based company with offices in Los Angeles, Nashville, Toronto, London, and Abu Dhabi. The company, founded in 2007, says it represents over 150,000 copyrights and 36,000 master recordings, encompassing a range of artists and genres from the early 1900s to the present.
During the company’s most recent earnings call, Reservoir Media CFO Jim Heindlmeyer said, “We remain focused on our strategy of prioritizing organic growth while making accretive acquisitions and will maintain a responsible capital deployment approach. We look forward to closing out the year within our updated guidance expectations for fiscal 2024.”
In the fiscal third quarter ended December 31, 2023, Reservoir Media posted a 14% increase in organic revenue to $35.5 million from a year earlier, or up 19% including acquisitions.
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